Private Equity

Over the last few weeks there has been much reported about problems with automated digital buying, whether it’s Facebook’s misreporting of metrics, YouTube ads running within controversial videos or the latest that Header Bidding isn’t fixing brand safety problems. This problem has major implications on the future of the business of digital publishing.

Over the last few years open market real time bidding has taken off, driven primarily by agencies who are looking to arbitrage pricing to improve their overall margins. They create imaginary companies, agency trading desks, which simply sell inventory to themselves to sell to their clients at significantly higher CPMs than they paid. Agencies are looking for low price inventory that provides the highest margin. Clients aren’t looking deeply enough at site lists and sources of clicks to see how much bad traffic and click fraud is occurring. There’s just too much to wade through to find out.

This creates a need for publishers to create more impressions to sell through low quality and low cost content. Publishers created click bait and fraudulent traffic to make up for the “race to the bottom” pricing being offered by buyers. Sites like Buzzfeed, Diply, Answers, and Mashable use social media to generate traffic to content of absolutely no consequence;  “listicles” that require multiple clicks to complete. Each click results in a fresh set of ads being loaded and charged to advertisers. The industry went too far and now it is time to return to more reasonable practices.

As a buyer who embraces programmatic buying of digital advertising for many clients I see the value in using data to better select which ad impressions to bid on based on our clients’ needs. I counsel my clients not to use programmatic just to save money, but to use it to minimize waste that comes from buying “media space” instead of “audiences”.

Header bidding will help in allowing publishers to evaluate all bids simultaneously, thereby selling the impression to the highest bidder but there is little incentive for them to minimize the click bait approach that leads to the wormhole. The best outcome for all parties is for faster adoption of private marketplace (PMP) deals that can be executed programmatically. There is more transactional transparency for all parties. Publishers can better control who advertises on their pages and marketers can have better control of brand safety and content they approve of.

Accept the higher CPM that PMP’s require because you’ll be getting the same results or better on effectiveness. Don’t let low CPMs be the barometer for your digital media buy.

 

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